Spain leads the way: Europe’s hottest real estate market in 2025

Real estate investment in Europe is set to rise by 23 per cent in 2025, reaching €214 billion, according to consultancy firm Savills.

This follows a strong end to 2024, with €53 billion invested in the last quarter, 31 per cent more than the same period in 2023.

For all of 2024, total investment is expected to hit €174 billion, a 17 per cent increase from the previous year. The main reason? Falling interest rates have boosted investor confidence.

Top Markets and Investor Trends

Spain is the most attractive market for 2025, based on a survey of investors managing over €800 billion in assets. The UK and France follow in second and third place. More than half of these investors plan to increase their investments in Europe and the Middle East.

Investors prefer properties priced between €20 million and €60 million, and transactions are expected to rise as financial conditions improve.

What Investors Are Buying

Residential and logistics properties remain the top choices, but there is growing interest in offices, hotels, data centres, and retail spaces. More investors (45 per cent) are willing to take bigger risks compared to 28 per cent last year, driven by limited new developments and strong demand for quality properties.

What’s Shaping the Market?

Several factors will impact real estate in 2025, including global trade, politics, and the redevelopment of old properties. Technology, energy, and climate change will also play a role.

With changing market conditions, diversification is key. Cross-border investments are expected to increase, especially in Europe, as the office market becomes more profitable and rental returns improve.